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 After reading this chapter, you should be able to:

  LO 1   Understand the potential effects of using reported product costs for decision making.

  LO 2   Explain how a two-stage product costing system works.

  LO 3   Compare and contrast plantwide and department allocation methods.

  LO 4   Explain how activity-based costing and a two-stage product system are related.

  LO 5   Compute product costs using activity-based costing.

  LO 6   Compare activity-based product costing to traditional department product costing methods.

  LO 7   Demonstrate the flow of costs through accounts using activity-based costing.

  LO 8   Apply activity-based costing to marketing and administrative services.